Updated from 2:03 p.m. EDT
Crude oil prices Thursday surged above $48 a barrel for the first time ever, following a string of record highs, as the market continued what many consider its inevitable march to $50.
The benchmark U.S. crude closed $1.43, or 3%, higher at $48.70 in floor trading on the New York Mercantile Exchange. The September futures contract gained about 1% yesterday.
The latest gain came as a showdown between Iraq's provisional government and radical Shiite cleric Muqtada al-Sadr appeared to be reaching a head. The cleric agreed to a cease-fire Wednesday, but the actual disarmament of his militia has yet to happen, according to media reports.
Edgy traders have had no shortage of reasons to bid up oil recently.
Violence in Iraq -- including more today -- and its potential to disrupt production and exports -- as it has on several occasions since the U.S.-led war and subsequent occupation -- has become a constant factor for the markets. Iraq today said it was close to restoring exports to 100%, after recent threats of sabotage curtailed activity, according to media reports.
Uncertainty surrounded the outcome of the high-stakes tax battle between the government and the nation's biggest oil company,
-- a tug-of-war drama that has sparked frequent concerns for its potential to slow exports -- after a court rejected the company's latest appeal Tuesday.
On Wednesday, a clutch of reports on supply and demand also spooked the markets. Weekly reports by the Department of Energy and the American Petroleum Institute both showed declines in stocks in the week ended Aug. 13, confirming market forecasts. In addition, a report by the Organization of Petroleum Exporting Countries forecast greater global demand in 2005 at a time when unusually strong global consumption has turned the supply-and-demand concept into a daily equation.
One recent potential supply worry was erased Sunday in Venezuela, where voters rejected a referendum seeking the recall of controversial President Hugo Chavez, easing concerns about possible civil unrest in Latin America's largest oil producer.
Traders also continue to pay close attention to Saudi Arabia, which warned again Monday that it is prepared to use remaining excess capacity to cool price speculation. The kingdom is the world's largest oil exporter.
Crude oil prices have routinely hit record highs in the past three weeks, following a modest decline from their previous June high as OPEC increased its official production level by some 2.5 million barrels a day.